A few days ago, I happened to visit the Defence
Shopping Mall — a single-purpose shopping complex. Believe me, it
was a wonderful experience. The Defence Shopping Mall is a magnificent
addition to the architectural skyline of Lahore. Located at the main
entrance of Defence Housing Society, this 580-shop emporium is an
exquisite blend of structural beauty, glasswork and a felicitous
colour scheme. It exudes altogether a different feel. A five-storey
edifice, each of its floors offers a rich mosaic of tile work. The
front shops are chiefly of glass i.e. the doors and the walls are a
mix of glass and aluminum. Colourful signboards, which remain lit most
of the time adds to its beauty. The roof has a beautifully designed
glass dome, which keeps the shops well lighted and sunny. Below the
dome, the interior is bedecked with the model of a World War-I plane.
The atrium too is unique. A big glass capsule lift and escalators ply
between the basement and the topmost floors. All these features
enhance the charm of the place. In short, once inside, one can see all
the shopping activity at a single glance. The basement is laid out in
coloured marble with a copper-steel design. A recreational area for
the buyers, on the lines of Sindbad, is under construction. The plaza
is thus a fine composite of shopping, recreation and pleasure. A whole
basement has been reserved for car parking. Apart from this, there is
plenty of outdoor parking on the three-side open fronts. There is
stand-by generator and fire-fighting equipment. It is, indeed, the
best shopping mall in the country. Rafi Group in the past has
constructed some splendid plazas in Lahore but the Defence Shopping
Mall is its flagship today. I was so fascinated by what I saw that I
decided to interview Imtiaz Rafi Butt, Chairman of the Rafi Group.
Here are a few excerpts of the interview.

Q.

Your
Defence Shopping Mall is an impressive project. Would you like to say
something about it?

A. Now that you have called it impressive, it
leaves me little room to expatiate on the subject. Nevertheless, its
architectural elegance and pleasant milieu make it the biggest and the
most attractive project of Pakistan. When the project was launched, 70
percent of the shops were booked at the very start. The ownership of
the shops is now being handed over to the buyers.

Q.

Your
articles on politics, history and real estate are read with keen
interest. What would you say about the present and the future of real
estate?

A.

Articles
on history and politics are motivated by my connection with the
Quaid-e-Azam and the Pakistan Movement. Real estate is my profession.
I have been active as a developer for the last 26 years. You can,
therefore, count me among the handful of pioneers. I have been
observing the ups and downs of real estate business for the last three
decades. Before I talk about its present state, I would like to say a
few words about its past. Real estate had its first boom in 1975, when
after the Arab-Israeli war in October 1973, the Arabs doubled and
trebled the price of oil and invested their capital in big
developmental projects in the Middle East and the Gulf. Thousands of
Pakistanis went there for employment and invested a large part of
their earnings in real estate. This situation led to the emergence of
a gang of double-dealers. Acting on Charles Pouzi's theory, they set
up financial companies, flooded the newspapers with advertisements and
defrauded the public. They promised to pay a monthly profit of 6% or
an annual profit of 72%. Charles Pouzi, by the way, was the biggest
conman of the United States in the first decade of the twentieth
century. He offered a 40% profit to investors and robbed them of
millions of dollars. His modus operandi was incredibly simple. Entice
the investors with the promise of high profits and then use their
money to pay off the previous investors. Pakistani companies emulated
the Pouzi formula and netted crores of rupees. Later these companies
themselves came to a sticky end. They saw the fleshy side of the Pouzi
formula but ignored how he came to grief. Conmanship like crime does
not pay but no one seems to be convinced. After the collapse of the
companies, co-operative banks applied the same trickery with little or
no change. They dangled big profits before the return-hungry investors
and invested the ill-gotten wealth chiefly in land. Real estate thus
registered a second boom. In the end, they also met the same fate. The
huge co-operative bank scam hit the headlines in late eighties and
early nineties. Billions of rupees got mired in property business,
which suffered a terrible setback, and people lost faith in it. Thus
in 1990, real estate business reached very low ebb. Investments were
now made in dollars and the dollar appreciated. Real estate received a
new boost after 9/11 and led to its third boom. Pakistani expatriates
in Europe and the US remitted 7.5 billion dollars to Pakistan. A large
chunk of this money went into real estate, especially in the purchase
of plots. Noticing the impetuosity of the buyers, a number of housing
societies surfaced. Sales were initiated in a thoughtless manner with
little or no regard for business ethics. More scandals came to light
and many more are likely to follow. The fervour of the buyers led to
the advent of yet another class, namely, that property dealers who
roped in investors and became investors themselves. They looked to
their mutual advantage and raised the prices at random thus making the
prices unrealistic. The present boom is also a bubble.

Q.

How long
will this bubble last?

A.

The
prices have already began to stabilise and the bubble could burst by
2006. It is true that money is circulating on a vast scale but it
should also be kept in mind that foreign investors are moving into
real estate, particularly into the housing sector in a big way. The
buyers are in a fix because of the ill reputation of some housing
schemes. Moreover, some buyers have already started investing in the
already completed project in the country, and not much bullish
activity is noticed in the booking of new projects that are coming up,
while others are focussing on Dubai for investment or purchase of real
estate. This boom, therefore, will not last very long, as the prices
have reached at an unimaginable level. If not for other reason, it
will still fall down with its own weight.

Q.

In the
final analysis, what is your message to the buyers?

A.

I would
advise them to invest in completed projects rather than in the
commercial and residential plazas that are being launched or are about
to start their construction now. For the simple reason that the land
of the complete plazas has been purchase before 9/11 when the prices
of land were low and realistic. For example, land of Defence Shopping
Mall was purchased below Rs50 lacs per kanal a few years back. Now the
price of such a piece of land is around 8 to 10 crore per kanal.
Amazingly high! And the construction materials are also in a steep
rise. The plazas, which are coming up now will have to be priced about
5 to 6 times higher at the same spot. And as for investment in plots
is concerned, it is now pure speculation and the prices of plots are
increasing unrealistically and entering in real estate speculation
market is a very dangerous business activity because you never know
when all the buyers start turning into sellers. When the hype breaks
its like musical chair, one doesn't know when the music will stop and
who gets no chair. When the bubble will burst, the prices of plots
would nosedive while those of completed and operational plazas etc.
will remain stable. The reason is that by then the plazas would have
established their business activity and worthiness. Besides, it is
also secure to invest in the commercial property rather than plots.
Because you can rent out your shops or start your own business right
away and start earning plus the appreciation, whereas you cannot do so
with land. Secondly, during the recession period commercial property
remain involves in business activities and its prices keeps on a
gradual rise while plots' prices do not appreciate and as such your
investment gets stuck.

Q.

What made
you conceive the idea of the Defence Shopping Mall?

A.

Frankly,
it was the Defence Society that motivated me to go in for a shopping
mall. This colony houses an affluent section of society. The location
that I chose was adjacent to the main entrance of the Defence Housing
Society. We insured that the design and ambiance of the place be in
keeping with the discriminating taste of the residents. The plaza is
centrally air-conditioned and fitted with background stereo music. I
am of the view that young men and women of affluent families, who wish
to go into business after completing their studies, should begin their
enterprise in the Defence Shopping Mall. Here they would find
everything in accordance with their expectations and bent of mind.
Capital cost of starting the business over here is designed to be very
low. The shops are of reasonable size and perfectly suited for
individual business. They can be obtained both on ownership basis or
on rent. It is an ideal spot for conducting retail business. I invite
the people to visit the Defence Shopping Mall and see things by
themselves. I am sure they will like what they see. It is a fine place
for setting any kind of retail outlet. One can do business even with
less capital. This Shopping Mall is most suitable for conducting
business in innovative products. Joint venture can be considered if
the proposed project is viable.